"Exports are expected to grow as the global economy is likely to recover moderately, which would help corporate activity"
- the Japanese Cabinet Office
The world's third largest economy is widely expected to expand by 2.5% in the fiscal year starting in April, due to Prime Minister Shinzo Abe's ambitious fiscal and monetary policies, the Japanese government's report showed Monday. This is more than twice higher than an estimate of 1% growth for the current fiscal year to March. Despite bold actions taken by the Japanese government, Japan is also counting on a recovery in key markets overseas, including the United States and Europe, which will boost an expansion rate in the country. Last week, the Bank of Japan raised its growth forecast for the same fiscal year to 2.3% from a previous 1.6% projection.
"Exports are expected to grow as the global economy is likely to recover moderately, which would help corporate activity. The government measures will also help capital spending," an official from the Cabinet Office said. "Also, employment is likely to increase, helped by the economic measures, which would boost private consumption."
"We can't say that fiscal discipline is fully ensured by this budget," said Junko Nishioka, chief economist at RBS Securities Japan Ltd. and a former Bank of Japan (8301) official. "Actual tax revenue could fall short of the government's forecast."
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